Nation-Building: How Kosovo’s Prime Minister Hopes to Develop a 21st Century Economy

An apartment block in Pristina, Kosovo's capital city. (Image: Alina de Wit, used with permission)

On June 8th, voters in Kosovo went to the polls. It was the third general election in the world’s 2nd youngest nation, and incumbent Prime Minister Hashim Thaci’s Democratic Party of Kosovo won a narrow victory over its rival, the Democratic League of Kosovo. Negotiations over a governing coalition are ongoing, but Thaci is widely anticipated to serve a third term as Prime Minister.

Thaci is hoping to turn the corner from survivalist politics – fighting for Kosovo’s very existence – to nation building. In many ways, this is a tougher task for a Prime Minister whose authority and street cred were forged on the battlefield: now, he must face internal dissent and employ political finesse. In his first post-election interview with the international press, Thaci looks forward to new challenges and explains how the country – by some metrics considered Europe’s poorest – hopes to gain a foothold in science-based fields of the high-tech 21st century economy.

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Wired: What are the main objectives of your third term? What has changed from your previous term to give you optimism for an improved economy?

Thaci: Our objective is creating jobs, jobs and jobs. In the last 15 years we fought a defensive war to protect ourselves from ethnic cleansing by the dictator [Slobodan] Milosevic and his regime. Finally, we won our freedom, and then we worked hard to declare our independence and started a nation-building process. We have invested heavily in infrastructure such as modern highways and schools. We also had to normalize relations with our former foe Serbia. I negotiated for over 250 hours with the Serbian PM to reach a historic agreement facilitated by EU foreign affairs chief Baroness Ashton.

Now, we have to start diversifying our portfolio of economic engagement and start privatizing some of our “family jewels” in order to bring foreign investment in strategic areas. In the mining sector, we privatized a nickel plant, and the Pristina Airport brought over 120 million Euros of investments. Cement, agriculture companies, ski centers, and energy plants are all areas we’re looking at for privatization.

I also intend to repatriate up to 1.5 billion euros of money Kosovo has in banks from the times of UN control, which came from selling off our former socially owned enterprises. This money will provide liquidity for Kosovo companies seeking growth and job-creation, so my new mission has a clear focus on developing the economy and creating new jobs. To achieve this, we will establish an employment fund which will consist of 1.5 billon euros for of small, medium and bigger businesses so they can start new or expand their businesses in order to create up to 200,000 new jobs.

Wired: How do you view science and technology in the context of governing Kosovo?

Thaci: We have the youngest population in Europe, which, along with the fact that we have a substantive diaspora that amounts to 30% of all Kosovars, means we are very connected to the world through physical movement and via the Internet. I plan to provide resources for start-ups in technology fields, waive VAT for native software production, and further work on e-government modules. We will also create a ministry that will help Kosovo bridge the digital divide and utilize the great resource we have – young, English-speaking and technology-savvy people.

Wired: How do you prevent your smartest citizens from leaving for opportunities elsewhere in the world?

Thaci: Brain drain can become brain gain if we create the right conditions for those that have traveled abroad to come back. In places like Dublin and Bangalore, residents have returned to their homeland if tax incentives and other measures are taken to help them return home with their newly acquired knowledge. Measures like ensuring the security of investments and strengthening the transparency of governance. I see no problem with Kosovars receiving education abroad, acquiring professional experience and returning. The challenge is in enabling the return, not preventing people from leaving the country.

Wired: The World Bank recently agreed to fund a coal fired power plant in Kosovo, despite it’s policy of not funding coal power plants. Do you think Kosovo should qualify as an “exception” to this rule?

Thaci: Of course it should. Kosovo has enormous coal resources and we have very old East-German coal plants. We need to close the oldest Kosova A plant by 2017, which means we will have a great gap to be filled by investments in new, modern and cleaner plants – supported by World Bank. Serbia just announced a big Chinese investment in its coal production and I would like to enable our own native generation. Our plant project supported by World Bank is a small project of 600 MgW, which is just a drop in the bucket of overall global plans for new coal plants. At the same time, we’re working on energy diversification, building a brand new hydro-plant; we also have licenses to proceed with other hydro, solar, and wind projects.

Wired: Kosovo’s primary economic forces are extractive industries like mining and agriculture. How do you plan to move toward a more knowledge-based economy?

Thaci: The focus must be on education, and we have a three-step strategic approach. First, we built and reconstructed a lot of dilapidated and war-torn school buildings; over 140 new schools were built during my mandate. Second, we increased the salaries of all teachers by over 100% in order to create a motivated workforce. The next step is most important – to work on curriculums and making sure our kids learn things in line with labor market and our economic profile.

Wired: How do you balance the long-term benefits of investment in science education with the more pressing issues facing Kosovo’s security and economy?

Thaci: Science, science education, and innovation are important, but these fields were neglected due to other urgent needs of transitional and post-war society. Now that we are firmly on the EU-accession path, we will work in attracting investments from EU programs and funds that help innovation and science. I must make difficult choices, but no area can be left untouched if we want to prosper and evolve our economy.